Aha! Brilliant; thank you moshu.
I'm a WordPress noob (just installed it for the first time this afternoon) and will need to integrate it with a site (if I get the job). I only need to display the posts in a simple fashion, so will be using your scenario 1. Haven't actually tried it yet, but, with your guidance, it seems quite simple.
The site will need both 'news' and 'testimonials' pages linked to the blog, and I'm planning to modify the loop on each page using the in_category() Template Tag so that only posts in the news (or testimonials) category are shown. Or is there a better way?
I did consider using '?cat=x' in my sites links but would rather avoid this if possible due to search engine issues.
Just one thing: can't quite see how the layout section on page 1 is relevant. If somebody already has their own site they're not likely to need help with that. Page 2 was where it was useful to me. But maybe I'm missing something.
Anyway, thanks again moshu.